II 

112TH CONGRESS 

1ST SESSION S. 693 

To establish a term certain for the conservatorships of Fannie Mae and 

Freddie Mac, to provide conditions for continued operation of such enterprises, and to provide for the wind down of such operations and the 

dissolution of such enterprises. 

IN THE SENATE OF THE UNITED STATES 

MARCH 31, 2011 

Mr. MCCAIN (for himself and Mr. HATCH) introduced the following bill; which 

was read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

A BILL 

To establish a term certain for the conservatorships of 

Fannie Mae and Freddie Mac, to provide conditions for 

continued operation of such enterprises, and to provide 

for the wind down of such operations and the dissolution 

of such enterprises. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘GSE Bailout Elimi5 nation and Taxpayer Protection Act’’. 


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1 SEC. 2. DEFINITIONS. 

2 For purposes of this Act, the following definitions 

3 shall apply: 

4 (1) CHARTER.—The term ‘‘charter’’ means— 

5 (A) with respect to the Federal National 

6 Mortgage Association, the Federal National 

7 Mortgage Association Charter Act (12 U.S.C. 

8 1716 et seq.); and 

9 (B) with respect to the Federal Home 

10 Loan Mortgage Corporation, the Federal Home 

11 Loan Mortgage Corporation Act (12 U.S.C. 

12 1451 et seq.). 

13 (2) DIRECTOR.—The term ‘‘Director’’ means 

14 the Director of the Federal Housing Finance Agen15 cy. 

16 (3) ENTERPRISE.—The term ‘‘enterprise’’ 

17 means— 

18 (A) the Federal National Mortgage Asso19 ciation; and 

20 (B) the Federal Home Loan Mortgage 

21 Corporation. 

22 (4) GUARANTEE.—The term ‘‘guarantee’’ 

23 means, with respect to an enterprise, the credit sup24 port of the enterprise that is provided by the Fed25 eral Government through its charter as a govern26 ment-sponsored enterprise. 


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1 SEC. 3. TERMINATION OF CURRENT CONSERVATORSHIP. 

2 (a) IN GENERAL.—Upon the expiration of the period 

3 referred to in subsection (b), the Director of the Federal 

4 Housing Finance Agency shall determine, with respect to 

5 each enterprise, if the enterprise is financially viable at 

6 that time and— 

7 (1) if the Director determines that the enter8 prise is financially viable, immediately take all ac9 tions necessary to terminate the conservatorship for 

10 the enterprise that is in effect pursuant to section 

11 1367 of the Federal Housing Enterprises Financial 

12 Safety and Soundness Act of 1992 (12 U.S.C. 

13 4617); or 

14 (2) if the Director determines that the enter15 prise is not financially viable, immediately appoint 

16 the Federal Housing Finance Agency as receiver 

17 under section 1367 of the Federal Housing Enter18 prises Financial Safety and Soundness Act of 1992 

19 and carry out such receivership under the authority 

20 of such section. 

21 (b) TIMING.—The period referred to in this sub22 section is, with respect to an enterprise, the 24-month pe23 riod beginning upon the date of the enactment of this Act. 

24 (c) FINANCIAL VIABILITY.—The Director may not 

25 determine that an enterprise is financially viable for pur26 poses of subsection (a) if the Director determines that any 


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1 of the conditions for receivership set forth in paragraph 

2 (3) or (4) of section 1367(a) of the Federal Housing En3 terprises Financial Safety and Soundness Act of 1992 (12 

4 U.S.C. 4617(a)) exists at the time with respect to the en5 terprise. 

6 SEC. 4. LIMITATIONS ON ENTERPRISE AUTHORITY. 

7 (a) LIMITATIONS EFFECTIVE UPON ENACTMENT.— 

8 Upon the enactment of this Act, the following provisions 

9 shall take effect: 

10 (1) REPEAL OF MANDATORY HOUSING ACTIVI11 TIES.— 

12 (A) REPEAL OF HOUSING GOALS.—The 

13 Federal Housing Enterprises Financial Safety 

14 and Soundness Act of 1992 is amended by 

15 striking sections 1331 through 1336 (12 U.S.C. 

16 4561–6). 

17 (B) CONFORMING AMENDMENTS.—Federal 

18 Housing Enterprises Financial Safety and 

19 Soundness Act of 1992 is amended— 

20 (i) in section 1303(28) (12 U.S.C. 

21 4502(28)), by striking ‘‘, and, for the pur22 poses’’ and all that follows through ‘‘des23 ignated disaster areas’’; 


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1 (ii) in section 1324(b)(1)(A) (12 

2 U.S.C. 4544(b)(1)(A)), by striking clauses 

3 (i), (ii), and (iv); 

4 (iii) in section 1339(h) (12 U.S.C. 

5 4569(h)), by striking paragraph (7); 

6 (iv) in section 1341 (12 U.S.C. 

7 4581)— 

8 (I) in subsection (a)— 

9 (aa) in paragraph (1), by in10 serting ‘‘or’’ after the semicolon 

11 at the end; 

12 (bb) in paragraph (2), by 

13 striking the semicolon at the end 

14 and inserting a period; and 

15 (cc) by striking paragraphs 

16 (3) and (4); and 

17 (II) in subsection (b)(2)— 

18 (aa) in subparagraph (A), 

19 by inserting ‘‘or’’ after the semi20 colon at the end; 

21 (bb) by striking subpara22 graphs (B) and (C); and 

23 (cc) by redesignating sub24 paragraph (D) as subparagraph 

25 (B); 


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1 (v) in section 1345(a) (12 U.S.C. 

2 4585(a))— 

3 (I) in paragraph (1), by inserting 

4 ‘‘or’’ after the semicolon at the end; 

5 (II) in paragraph (2), by striking 

6 the semicolon at the end and inserting 

7 a period; and 

8 (III) by striking paragraphs (3) 

9 and (4); and 

10 (vi) in section 1371(a)(2) (12 U.S.C. 

11 4631(a)(2)), by striking ‘‘with any housing 

12 goal established under subpart B of part 2 

13 of subtitle A of this title, with section 1336 

14 or 1337 of this title,’’. 

15 (C) REPEAL OF HOUSING TRUST FUND.— 

16 (i) REPEAL.—The Federal Housing 

17 Enterprises Financial Safety and Sound18 ness Act of 1992 is amended by striking 

19 sections 1337 and 1338 (12 U.S.C. 4567, 

20 4568). 

21 (ii) CONFORMING AMENDMENTS.— 

22 The Federal Housing Enterprises Finan23 cial Safety and Soundness Act of 1992 is 

24 amended— 


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1 (I) in section 1303(24)(B) (12 

2 U.S.C. 4502(24)(B)), by striking 

3 ‘‘1338 and’’; 

4 (II) in section 1324(b)(1)(A) (12 

5 U.S.C. 4544(b)(1)(A))— 

6 (aa) by striking clause (iii); 

7 (bb) by striking the dash 

8 after ‘‘which’’ and inserting the 

9 text of clause (v) and a period; 

10 and 

11 (cc) by striking clause (v); 

12 (III) in section 1339(b)— 

13 (aa) by striking paragraph 

14 (1); 

15 (bb) by striking the dash 

16 after ‘‘consist of’’ and inserting 

17 the text of paragraph (2) and a 

18 period; and 

19 (cc) by striking paragraph 

20 (2); and 

21 (IV) in section 1346 (12 U.S.C. 

22 4585), by striking subsection (f). 

23 (2) PORTFOLIO LIMITATIONS.—Subtitle B of 

24 title XIII of the Housing and Community Develop25 ment Act of 1992 (12 U.S.C. 4611 et seq.) is 


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1 amended by adding at the end the following new sec2 tion: 

3 ‘‘SEC. 1369E. RESTRICTION ON MORTGAGE ASSETS OF EN4 TERPRISES. 

5 ‘‘(a) RESTRICTION.—No enterprise shall own, as of 

6 any applicable date in this subsection or thereafter, mort7 gage assets in excess of— 

8 ‘‘(1) upon the expiration of the 1-year period 

9 that begins upon the enactment of the GSE Bailout 

10 Elimination and Taxpayer Protection Act or there11 after, $700,000,000,000; 

12 ‘‘(2) upon the expiration of the 2-year period 

13 that begins upon the enactment of such Act or 

14 thereafter, $600,000,000,000; 

15 ‘‘(3) upon the expiration of the 3-year period 

16 that begins upon the enactment of such Act or 

17 thereafter, $475,000,000,000; 

18 ‘‘(4) upon the expiration of the 4-year period 

19 that begins upon the enactment of such Act or 

20 thereafter, $350,000,000,000; and 

21 ‘‘(5) upon the expiration of the 5-year period 

22 that begins upon the enactment of such Act or 

23 thereafter, $250,000,000,000. 

24 ‘‘(b) DEFINITION OF MORTGAGE ASSETS.—For pur25 poses of this section, the term ‘mortgage assets’ means, 


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1 with respect to an enterprise, assets of such enterprise 

2 consisting of mortgages, mortgage loans, mortgage-related 

3 securities, participation certificates, mortgage-backed 

4 commercial paper, obligations of real estate mortgage in5 vestment conduits and similar assets, in each case to the 

6 extent such assets would appear on the balance sheet of 

7 such enterprise in accordance with generally accepted ac8 counting principles in effect in the United States as of 

9 September 7, 2008 (as set forth in the opinions and pro10 nouncements of the Accounting Principles Board and the 

11 American Institute of Certified Public Accountants and 

12 statements and pronouncements of the Financial Account13 ing Standards Board from time to time; and without giv14 ing any effect to any change that may be made after Sep15 tember 7, 2008, in respect of Statement of Financial Ac16 counting Standards No. 140 or any similar accounting 

17 standard).’’. 

18 (3) REPEAL OF INCREASES TO CONFORMING

19 LOAN LIMITS.— 

20 (A) REPEAL OF TEMPORARY INCREASES.— 

21 (i) CONTINUING APPROPRIATIONS

22 ACT, 2011.—Section 146 of the Continuing 

23 Appropriations Act, 2011 (Public Law 

24 111–242; 124 Stat. 2615) is hereby re25 pealed. 


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1 (ii) CONTINUING APPROPRIATIONS

2 RESOLUTION, 2010.—Section 167 of the 

3 Continuing Appropriations Resolution, 

4 2010 (division B of Public Law 111–68 

5 (as added by section 104 of division B of 

6 Public Law 111–88; 123 Stat. 2973)) is 

7 hereby repealed. 

8 (iii) AMERICAN RECOVERY AND REIN9 VESTMENT ACT OF 2009.—Section 1203 of 

10 division A of the American Recovery and 

11 Reinvestment Act of 2009 (Public Law 

12 111–5; 123 Stat. 225) is hereby repealed. 

13 (iv) ECONOMIC STIMULUS ACT OF

14 2008.—Section 201 of the Economic Stim15 ulus Act of 2008 (Public Law 110–185; 

16 122 Stat. 619) is hereby repealed. 

17 (B) REPEAL OF GENERAL LIMIT AND PER18 MANENT HIGH-COST AREA INCREASE.—Para19 graph (2) of section 302(b) of the Federal Na20 tional Mortgage Association Charter Act (12 

21 U.S.C. 1717(b)(2)) and paragraph (2) of sec22 tion 305(a) of the Federal Home Loan Mort23 gage Corporation Act (12 U.S.C. 1454(a)(2)) 

24 are each amended to read as such sections were 

25 in effect immediately before the enactment of 


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1 the Housing and Economic Recovery Act of 

2 2008 (Public Law 110–289). 

3 (C) REPEAL OF NEW HOUSING PRICE

4 INDEX.—Section 1322 of the Federal Housing 

5 Enterprises Financial Safety and Soundness 

6 Act of 1992, as added by section 1124(d) of the 

7 Housing and Economic Recovery Act of 2008 

8 (Public Law 110–289), is hereby repealed. 

9 (D) REPEAL.—Section 1124 of the Hous10 ing and Economic Recovery Act of 2008 (Public 

11 Law 110–289) is hereby repealed. 

12 (E) ESTABLISHMENT OF CONFORMING

13 LOAN LIMIT.—For the first year beginning after 

14 the date of the enactment of this Act, the limi15 tations governing the maximum original prin16 cipal obligation of conventional mortgages that 

17 may be purchased by the Federal National 

18 Mortgage Association and the Federal Home 

19 Loan Mortgage Corporation, referred to in sec20 tion 302(b)(2) of the Federal National Mort21 gage Association Charter Act (12 U.S.C. 

22 1717(b)(2)) and section 305(a)(2) of the Fed23 eral Home Loan Mortgage Corporation Act (12 

24 U.S.C. 1454(a)(2)), respectively, shall be con25 sidered to be— 


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1 (i) $417,000 for a mortgage secured 

2 by a single-family residence, 

3 (ii) $533,850 for a mortgage secured 

4 by a 2-family residence, 

5 (iii) $645,300 for a mortgage secured 

6 by a 3-family residence, and 

7 (iv) $801,950 for a mortgage secured 

8 by a 4-family residence, 

9 and such limits shall be adjusted effective each 

10 January 1 thereafter in accordance with such 

11 sections 302(b)(2) and 305(a)(2). 

12 (4) INCREASE IN GUARANTEE FEES.—Subpart 

13 A of part 2 of subtitle A of Federal Housing Enter14 prises Financial Safety and Soundness Act of 1992 

15 is amended by adding after section 1326 (12 U.S.C. 

16 4546) the following new section: 

17 ‘‘SEC. 1327. ENTERPRISE GUARANTEE FEES. 

18 ‘‘(a) INCREASE.—Subject to subsection (b), the Di19 rector shall, by regulation or order, require that each en20 terprise charge a guarantee fee, in connection with any 

21 mortgage guaranteed after the expiration of the 3-year pe22 riod beginning on the date of the enactment of the GSE 

23 Bailout Elimination and Taxpayer Protection Act, in an 

24 amount that the Director determines is equivalent to the 

25 amount that the enterprise would charge for such a fee 


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1 if the enterprise were held to the same capital standards 

2 as private banks or financial institutions. 

3 ‘‘(b) OPTION TO PHASE-IN OVER 3 YEARS.—The Di4 rector may, at the discretion of the Director, by regulation 

5 or order, provide for compliance with subsection (a) by re6 quiring each enterprise to increase the guarantee fee 

7 charged by the enterprise incrementally during the 3-year 

8 period specified in subsection (a) in a manner sufficient 

9 to comply with subsection (a) upon the expiration of the 

10 period specified in subsection (a). 

11 ‘‘(c) FLEXIBILITY IN DETERMINATION OF IN12 CREASE.—To determine the amount of the increase under 

13 subsection (a), the Director shall establish a pricing mech14 anism as the Director considers appropriate, taking into 

15 consideration current market conditions and any data col16 lected pursuant to section 1601 of the Housing and Eco17 nomic Recovery Act of 2008 (12 U.S.C. 4514a). 

18 ‘‘(d) DEFINITION OF GUARANTEE FEE.—For pur19 poses of this section, the term ‘guarantee fee’ means a 

20 fee charged by an enterprise in connection with any guar21 antee, issued by the enterprise, of the timely payment of 

22 principal and interest on securities, notes, and other obli23 gations based on or backed by mortgages on residential 

24 real properties. Such term includes— 


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1 ‘‘(1) the guaranty fee charged by the Federal 

2 National Mortgage Association with respect to mort3 gage-backed securities; and 

4 ‘‘(2) the management and guarantee fee 

5 charged by the Federal Home Loan Mortgage Cor6 poration with respect to participation certificates.’’. 

7 (5) PROHIBITION OF REDUCTION IN RATE OF

8 DIVIDENDS.— 

9 (A) FANNIE MAE.—Section 304 of the 

10 Federal National Mortgage Association Charter 

11 Act (12 U.S.C. 1719) is amended by adding at 

12 the end the following new subsection: 

13 ‘‘(h) PROHIBITION OF REDUCTION IN RATE OF DIVI14 DENDS ON SENIOR PREFERRED STOCK.—Notwith15 standing any other provision of law, any provision of the 

16 Senior Preferred Stock Purchase Agreement entered into 

17 between the Department of the Treasury and the corpora18 tion in September 2008 (as such Agreement may be 

19 amended and restated), or any provision of any certificate 

20 in connection with such Agreement creating or designating 

21 the terms, powers, preferences, privileges, limitations, or 

22 any other conditions of the Variable Liquidation Pref23 erence Senior Preferred Stock of the corporation issued 

24 pursuant to such Agreement, the rate of dividends paid 

25 on the Variable Liquidation Preference Senior Preferred 


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1 Stock of the corporation issued pursuant to such Agree2 ment shall not be reduced from the rate in effect pursuant 

3 to such Agreement as of March 1, 2011.’’. 

4 (B) FREDDIE MAC.—Section 306 of the 

5 Federal Home Loan Mortgage Corporation Act 

6 (12 U.S.C. 1455) is amended by adding at the 

7 end the following new subsection: 

8 ‘‘(m) PROHIBITION OF REDUCTION IN RATE OF

9 DIVIDENDS ON SENIOR PREFERRED STOCK.—Notwith10 standing any other provision of law, any provision of the 

11 Senior Preferred Stock Purchase Agreement entered into 

12 between the Department of the Treasury and the Corpora13 tion in September 2008 (as such Agreement may be 

14 amended and restated), or any provision of any certificate 

15 in connection with such Agreement creating or designating 

16 the terms, powers, preferences, privileges, limitations, or 

17 any other conditions of the Variable Liquidation Pref18 erence Senior Preferred Stock of the Corporation issued 

19 pursuant to such Agreement, the rate of dividends paid 

20 on the Variable Liquidation Preference Senior Preferred 

21 Stock of the Corporation issued pursuant to such Agree22 ment shall not be reduced from the rate in effect pursuant 

23 to such Agreement as of March 1, 2011.’’. 

24 (b) REVISED AUTHORITY.—Upon the expiration of 

25 the period referred to in section 3(b), if the Director 


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1 makes the determination under section 3(a)(1), the fol2 lowing provisions shall take effect: 

3 (1) INCREASE IN MINIMUM CAPITAL REQUIRE4 MENT.—Section 1362 of the Federal Housing En5 terprises Financial Safety and Soundness Act of 

6 1992 (12 U.S.C. 4612) is amended— 

7 (A) in subsection (a), by striking ‘‘For 

8 purposes of this subtitle, the minimum capital 

9 level for each enterprise shall be’’ and inserting 

10 ‘‘The minimum capital level established under 

11 subsection (g) for each enterprise may not be 

12 lower than’’; 

13 (B) in subsection (c)— 

14 (i) by striking ‘‘subsections (a) and’’ 

15 and inserting ‘‘subsection’’; 

16 (ii) by striking ‘‘regulated entities’’ 

17 the first place such term appears and in18 serting ‘‘Federal Home Loan Banks’’; 

19 (iii) by striking ‘‘for the enterprises,’’; 

20 (iv) by striking ‘‘, or for both the en21 terprises and the banks,’’; 

22 (v) by striking ‘‘the level specified in 

23 subsection (a) for the enterprises or’’; and 


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1 (vi) by striking ‘‘the regulated entities 

2 operate’’ and inserting ‘‘such banks oper3 ate’’; 

4 (C) in subsection (d)(1)— 

5 (i) by striking ‘‘subsections (a) and’’ 

6 and inserting ‘‘subsection’’; and 

7 (ii) by striking ‘‘regulated entity’’ 

8 each place such term appears and inserting 

9 ‘‘Federal home loan bank’’; 

10 (D) in subsection (e), by striking ‘‘regu11 lated entity’’ each place such term appears and 

12 inserting ‘‘Federal home loan bank’’; 

13 (E) in subsection (f)— 

14 (i) by striking ‘‘the amount of core 

15 capital maintained by the enterprises,’’; 

16 and 

17 (ii) by striking ‘‘regulated entities’’ 

18 and inserting ‘‘banks’’; and 

19 (F) by adding at the end the following new 

20 subsection: 

21 ‘‘(g) ESTABLISHMENT OF REVISED MINIMUM CAP22 ITAL LEVELS.— 

23 ‘‘(1) IN GENERAL.—The Director shall cause 

24 the enterprises to achieve and maintain adequate 

25 capital by establishing minimum levels of capital for 


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1 such the enterprises and by using such other meth2 ods as the Director deems appropriate. 

3 ‘‘(2) AUTHORITY.—The Director shall have the 

4 authority to establish such minimum level of capital 

5 for an enterprise in excess of the level specified 

6 under subsection (a) as the Director, in the Direc7 tor’s discretion, deems to be necessary or appro8 priate in light of the particular circumstances of the 

9 enterprise. 

10 ‘‘(h) FAILURE TO MAINTAIN REVISED MINIMUM

11 CAPITAL LEVELS.— 

12 ‘‘(1) UNSAFE AND UNSOUND PRACTICE OR CON13 DITION.—Failure of a enterprise to maintain capital 

14 at or above its minimum level as established pursu15 ant to subsection (g) of this section may be deemed 

16 by the Director, in his discretion, to constitute an 

17 unsafe and unsound practice or condition within the 

18 meaning of this title. 

19 ‘‘(2) DIRECTIVE TO ACHIEVE CAPITAL

20 LEVEL.— 

21 ‘‘(A) AUTHORITY.—In addition to, or in 

22 lieu of, any other action authorized by law, in23 cluding paragraph (1), the Director may issue 

24 a directive to an enterprise that fails to main25 tain capital at or above its required level as esVerDate Mar 15 2010 03:51 Apr 01, 2011 Jkt 099200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S693.IS S693

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1 tablished pursuant to subsection (g) of this sec2 tion. 

3 ‘‘(B) PLAN.—Such directive may require 

4 the enterprise to submit and adhere to a plan 

5 acceptable to the Director describing the means 

6 and timing by which the enterprise shall achieve 

7 its required capital level. 

8 ‘‘(C) ENFORCEMENT.—Any such directive 

9 issued pursuant to this paragraph, including 

10 plans submitted pursuant thereto, shall be en11 forceable under the provisions of subtitle C of 

12 this title to the same extent as an effective and 

13 outstanding order issued pursuant to subtitle C 

14 of this title which has become final. 

15 ‘‘(3) ADHERENCE TO PLAN.— 

16 ‘‘(A) CONSIDERATION.—The Director may 

17 consider such enterprise’s progress in adhering 

18 to any plan required under this subsection 

19 whenever such enterprise seeks the requisite ap20 proval of the Director for any proposal which 

21 would divert earnings, diminish capital, or oth22 erwise impede such enterprise’s progress in 

23 achieving its minimum capital level. 

24 ‘‘(B) DENIAL.—The Director may deny 

25 such approval where it determines that such 


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1 proposal would adversely affect the ability of 

2 the enterprise to comply with such plan.’’. 

3 (2) REQUIREMENT OF MINIMUM DOWNPAYMENT

4 FOR MORTGAGES PURCHASED.— 

5 (A) FANNIE MAE.—Subsection (b) of sec6 tion 302 of the Federal National Mortgage As7 sociation Charter Act (12 U.S.C. 1717(b)) is 

8 amended by adding at the end the following 

9 new paragraph: 

10 ‘‘(7) Notwithstanding any other provision of this Act, 

11 the corporation may not newly purchase any mortgage un12 less the mortgagor has paid, in cash or its equivalent on 

13 account of the property securing repayment such mort14 gage, in accordance with regulations issued by the Direc15 tor of the Federal Housing Finance Agency, not less 

16 than— 

17 ‘‘(A) for any mortgage purchased during the 

18 12-month period beginning upon the expiration of 

19 the period referred to in section 3(b) of the GSE 

20 Bailout Elimination and Taxpayer Protection Act, 5 

21 percent of the appraised value of the property; 

22 ‘‘(B) for any mortgage purchased during the 

23 12-month period beginning upon the expiration of 

24 the 12-month period referred to in subparagraph (A) 


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1 of this paragraph, 7.5 percent of the appraised value 

2 of the property; and 

3 ‘‘(C) for any mortgage purchased during the 

4 12-month period beginning upon the expiration of 

5 the 12-month period referred to in subparagraph 

6 (B) of this paragraph, 10 percent of the appraised 

7 value of the property.’’. 

8 (B) FREDDIE MAC.—Subsection (a) of sec9 tion 305 of the Federal Home Loan Mortgage 

10 Corporation Act (12 U.S.C. 1454(a)) is amend11 ed by adding at the end the following new para12 graph: 

13 ‘‘(6) Notwithstanding any other provision of this Act, 

14 the Corporation may not newly purchase any mortgage 

15 unless the mortgagor has paid, in cash or its equivalent 

16 on account of the property securing repayment such mort17 gage, in accordance with regulations issued by the Direc18 tor of the Federal Housing Finance Agency, not less 

19 than— 

20 ‘‘(A) for any mortgage purchased during the 

21 12-month period beginning upon the expiration of 

22 the period referred to in section 3(b) of the GSE 

23 Bailout Elimination and Taxpayer Protection Act, 5 

24 percent of the appraised value of the property; 


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1 ‘‘(B) for any mortgage purchased during the 

2 12-month period beginning upon the expiration of 

3 the 12-month period referred to in subparagraph (A) 

4 of this paragraph, 7.5 percent of the appraised value 

5 of the property; and 

6 ‘‘(C) for any mortgage purchased during the 

7 12-month period beginning upon the expiration of 

8 the 12-month period referred to in subparagraph 

9 (B) of this paragraph, 10 percent of the appraised 

10 value of the property.’’. 

11 (3) REQUIREMENT TO PAY STATE AND LOCAL

12 TAXES.— 

13 (A) FANNIE MAE.—Paragraph (2) of sec14 tion 309(c) of the Federal National Mortgage 

15 Association Charter Act (12 U.S.C. 

16 1723a(c)(2)) is amended— 

17 (i) by striking ‘‘shall be exempt from’’ 

18 and inserting ‘‘shall be subject to’’; and 

19 (ii) by striking ‘‘except that any’’ and 

20 inserting ‘‘and any’’. 

21 (B) FREDDIE MAC.—Section 303(e) of the 

22 Federal Home Loan Mortgage Corporation Act 

23 (12 U.S.C. 1452(e)) is amended— 

24 (i) by striking ‘‘shall be exempt from’’ 

25 and inserting ‘‘shall be subject to’’; and 


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1 (ii) by striking ‘‘except that any’’ and 

2 inserting ‘‘and any’’. 

3 (4) REPEALS RELATING TO REGISTRATION OF

4 SECURITIES.— 

5 (A) FANNIE MAE.— 

6 (i) MORTGAGE-BACKED SECURI7 TIES.—Section 304(d) of the Federal Na8 tional Mortgage Association Charter Act 

9 (12 U.S.C. 1719(d)) is amended by strik10 ing the fourth sentence. 

11 (ii) SUBORDINATE OBLIGATIONS.— 

12 Section 304(e) of the Federal National 

13 Mortgage Association Charter Act (12 

14 U.S.C. 1719(e)) is amended by striking the 

15 fourth sentence. 

16 (B) FREDDIE MAC.—Section 306 of the 

17 Federal Home Loan Mortgage Corporation Act 

18 (12 U.S.C. 1455) is amended by striking sub19 section (g). 

20 SEC. 5. REQUIRED WIND DOWN OF OPERATIONS AND DIS21 SOLUTION OF ENTERPRISE. 

22 (a) APPLICABILITY.—This section shall apply to an 

23 enterprise upon the expiration of the 3-year period that 

24 begins upon the expiration of the period referred to in sec25 tion 3(b). 


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1 (b) REPEAL OF CHARTER.—Upon the applicability of 

2 this section to an enterprise, the charter for the enterprise 

3 is repealed and the enterprise shall have no authority to 

4 conduct new business under such charter, except that the 

5 provisions of such charter in effect immediately before 

6 such repeal shall continue to apply with respect to the 

7 rights and obligations of any holders of outstanding debt 

8 obligations and mortgage-backed securities of the enter9 prise. 

10 (c) WIND DOWN.—Upon the applicability of this sec11 tion to an enterprise, the Director and the Secretary of 

12 the Treasury shall jointly take such action, and may pre13 scribe such regulations and procedures, as may be nec14 essary to wind down the operations of an enterprise as 

15 an entity chartered by the United States Government over 

16 the duration of the 10-year period beginning upon the ap17 plicability of this section to the enterprise (pursuant to 

18 subsection (a)) in an orderly manner consistent with this 

19 Act and the ongoing obligations of the enterprise. 

20 (d) DIVISION OF ASSETS AND LIABILITIES; AUTHOR21 ITY TO ESTABLISH HOLDING CORPORATION AND DIS22 SOLUTION TRUST FUND.—The action and procedures re23 quired under subsection (c)— 

24 (1) shall include the establishment and execu25 tion of plans to provide for an equitable division and 


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25 

•S 693 IS

1 distribution of assets and liabilities of the enterprise, 

2 including any liability of the enterprise to the United 

3 States Government or a Federal reserve bank that 

4 may continue after the end of the period described 

5 in subsection (c); and 

6 (2) may provide for establishment of— 

7 (A) a holding corporation organized under 

8 the laws of any State of the United States or 

9 the District of Columbia for the purposes of the 

10 reorganization and restructuring of the enter11 prise; and 

12 (B) one or more trusts to which to trans13 fer— 

14 (i) remaining debt obligations of the 

15 enterprise, for the benefit of holders of 

16 such remaining obligations; or 

17 (ii) remaining mortgages held for the 

18 purpose of backing mortgage-backed secu19 rities, for the benefit of holders of such re20 maining securities. 

Æ 


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